Friday 22 June 2012 16.43 EDT
First published on Friday 22 June 2012 16.43 EDT

The sun was shining in Mexico at the start of a positive week. The G20 leaders had supposedly come up with a new bond-buying wheeze to ease the crisis and Greece was inching towards a new government. But, as in the many weeks and months before it, the mood soon slipped back to frustration.

Then came more worrying signs from China, which recorded its eighth consecutive fall in manufacturing output as orders from across Europe dried up. And after mining stocks traded poorly – as a direct result of reduced Chinese demand – it was only a matter of time before commodities and oil followed suit.

Brent crude dropped to an 18-month low on Thursday of $89.23, before recovering on Friday to $91.23, but this is still an eight-month low. Gold made its biggest weekly loss this year but steadied, thanks to the ECB's decision to ease collateral requirements, at $1,565 an ounce. Copper hit a six-month low and aluminium was also down.

In Spain, bond rates peaked above the key 7% level seen as unsustainable, but ended the week lower, at around the 6.4% mark, which provided some relief.

The US Federal Reserve introduced a new phase of Operation Twist, designed to drive down longer-term interest rates, but the move failed to impress the markets, which had been hoping for more aggressive action.

The FTSE ended up 36 points on the week at 5,514 but it could have been worse as Moody's heavily anticipated downgrading of 16 banks worldwide failed to have much impact, with the share prices of HSBC, RBS, Lloyds and Barclays all escaping unscathed.

In business, it was a week of (mostly unfounded) takeover speculation, with engineer Invensys surging on Wednesday on talk that it had been approached by US group Emerson Electric. Shares in the company, which makes control systems and rail signalling equipment, surged 26.6% to 257p. Under pressure, the company issued a statement admitting "highly preliminary" talks with Emerson, as well as discussions with other companies, but said these had now ended. The shares sank 14% at 220p and closed the week on 217.5p.

Elsewhere on the speculative front, bid rumours returned to ITV, down 1p at 75.5p, with the broadcaster said to be in the sights of a private equity group. KKR was one name mentioned, with a possible price of 150p a share, but many analysts were sceptical. At the same time the broadcaster announced a tender offer for up to £250m of its bonds, which would lower its interest payments.

On the high street, Home Retail Group was lifted by a better than expected performance from its Argos chain, where like-for-like sales in the first quarter dipped just 0.2% compared with expectations of near 4%. But Homebase sales suffered from recent poor weather. Despite that slip, HRG shares were up 20.6% on the week, closing at 82.9p.

Kesa Electricals, 50.3p, which recently sold off its UK business Comet to buyout firm OpCapita, unveiled a €314m loss for the year after exceptional charges. The company is to change its name to Darty, its main business in France. Meanwhile Dixons Retail reported a 17% fall in full-year profits, thanks to the difficult consumer environment, but said it had made a good start to the current year. Its shares were up 31.4% on the week, closing at 17.3p.